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0
10
30
50
40
20
0
2
4
10
8
6
44.0
6.0 25.3
3.9
5.6
1.1
3.4
39.7
7.5
24.5
2005 2006 2007 2008 2009
0
20
60
100
80
40
0
2
4
10
8
6
91.3
4.1
87.7
4.4
4.1
81.6
2007 2008 2009
0
200
400
800
600
734.0
353.8
380.1
649.3712.8703.7717.6
2005 2006 2007 2008 2009
323.3
354.2
363.4
355.3
348.4
370.4
342.4
326.0
(Billions of yen) (Billions of yen) (%) (Billions of yen) (%)
System Products
Network Products
Operating income (left scale)
Operating income margin (right scale)
Capital expenditure (left scale)
Ratio of R&D expenditure to net sales (right scale)
* Including intersegment sales * For entire Technology Solutions segment
(Years ended March 31) (Years ended March 31) (Years ended March 31)
Sub-segment Sales* Operating Income/
Operating Income Margin
Capital Expenditure, Ratio of
R&D Expenditure to Net Sales*
Technology Solutions/System Platforms
Fiscal 2008 Business Results
Market Trends
System Products: In 2008, the server market in Japan contracted
7.3% year on year to US$6.2 billion. While the market for main-
frame servers improved year on year due to large-scale upgrade
projects, the server market as a whole contracted as the economic
downturn triggered a sharp cutback in hardware investment.
Similarly, despite firm demand from China and other emerging
economies until last year, the global server market declined 6.2%
to US$57.1 billion, due to the global economic downturn.
Network Products: The Japan market for network equipment in
2008 saw strong performance from Wavelength Division Multiplex-
ing (WDM) and other optical transmission equipment, routers, and
other IP devices, reflecting active investment in Next- Generation
Network (NGN) equipment by telecommunications carriers. The
mobile infrastructure market declined year on year as investments
in 3G mobile phone base stations to enhance network quality
passed their peak.
In North America, optical transmission market spending was
lower than the previous year, with reductions in capital expendi-
tures due to the economic recession from the second half of the
year. This outweighed continued large-scale investments by
major telecommunications carriers rolling out broadband infra-
structure and shifting to network IP technology.
Operational Review
The System Platforms sub-segment, including System Products
and Network Products, reported sales of ¥649.3 billion, a decrease
of 8.9% from the previous fiscal year.
System Products: Sales of System Products declined 12.0% year
on year to ¥326.0 billion. In Japan, the economic recession led to
lower sales of UNIX and x86 servers, but sales of mainframe serv-
ers were brisk, supported by upgrade demand particularly from
public and financial sector customers. Fujitsu successfully cap-
tured the top share of the Japanese server market for a second
consecutive year. Outside Japan, sales declined. This was due
largely to the economic recession in Europe and the United States,
and the fact that in fiscal 2007, sales were temporarily boosted by
strong demand for both older and new models of UNIX servers.
Network Products: Sales of Network Products decreased 5.6% to
¥323.3 billion. Sales of optical transmission systems were flat year
on year, as growth in NGN-related sales in Japan was countered
by a slump in sales for existing models. Sales to North America
declined despite steady growth of Metro WDM services, due to a
decline in next-generation SONET sales and to currency exchange
rates. Sales in the European market were also lower. In mobile
systems, sales of multi-band compatible base stations increased,
but overall sales declined on lower sales of other models on
reductions in 3G investments. For network solutions, sales rose
sharply on higher sales of routers for NGNs.
Operating income was ¥25.3 billion, ¥14.3 billion lower than
the previous fiscal year.
In System Products, income declined due to lower sales of UNIX
servers outside Japan and stymied growth in open-source servers
in Japan due to the adverse economic climate.
In Network Products, the operating loss persisted with ongo-
ing investment in new optical transmission systems for NGN in
the US and the UK, as well as delays meeting cost efficiency tar-
gets and changes in the network product mix. However, the
extent of the loss narrowed, reflecting efficient mobile phone
Operational Review and Outlook
032 ANNUAL REPORT 2009
FUJITSU LIMITED